Obama continues to deny that the health insurance mandate which is backed with a penalty to be collected by the IRS is a "tax." He says "For us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase." Three responses:

Asking people to take individual responsibility for their health care expenses is not a tax. Asking them to do so via a particular method, in this case the purchase of an insurance policy rather than, say, just paying expenses as they go, is a tax.

Obama might argue that since people are getting value for the policy they have to buy, there is not net tax but just a (forced) exchange of value. But this is the classic technocratic fault, to assume that the central planner's definition of value is the same as every individuals. But its not. Many folks don't get value from a policy, which is why they don't buy one today

Even if Obama were right in #2, he would still be wrong given the rules embedded in this bill. Young, healthy people will be forced to subsidize the old and those with pre-existing conditions by the rules imposed on insurance companies. These rules effectively make it impossible to charge full cost to the old and sick, so that the young and the healthy will have to pay more. Because the young and the healthy will not see values in policies at the prices they will be paying (given these transfers), they won't value the policy with is EXACTLY why the law has to force them to buy it. Which is why it is a tax.

Competition is a "discovery procedure," Nobel-prize-winning economist F. A. Hayek taught. Through the competitive market process, we producers and consumers constantly learn things that force us to adjust our behavior if we are to succeed. Central planners fail for two reasons:

First, knowledge about supply, demand, individual preferences and resource availability is scattered -- much of it never articulated -- throughout society. It is not concentrated in a database where a group of planners can access it.

Second, this "data" is dynamic: It changes without notice. No matter how honorable the central planners' intentions, they will fail because they cannot know the needs and wishes of 300 million different people. And if they somehow did know their needs, they wouldn't know them tomorrow.

Moore declares capitalism evil, but he's never clear about what "capitalism" means. Considering how much time he spends documenting the cozy relationship between business and government, I thought he might mean "state capitalism."

But then he uses the term "free market" as a synonym for what he doesn't like.

What does the free market have to do with businesses manipulating government and strong-arming Congress for bailouts? Moore properly condemns both.

visits the National Archives to see if the Constitution establishes capitalism as the country's economic system. Seeing the words "people," "union," and "welfare" in the document, he says, "Sounds like that other ism."

The reason is because free-market capitalism is not a system. It is the un-system. It is the lack of a system. It is the chaotic, anarchic, bottom-up actions of 300 million people acting to direct their lives as they see fit and improve their own financial well-being. The fact that it works without top-down coordination, that the right number of pencils get manufactured each year without a pencil czar, is a testament to the power of a few simple tools, particularly price, in signaling to individuals where they might best employ their own time and capital.

For years I had some kind of corporate health plan. When I started my own business, I bought a Blue Cross plan that roughly mirrored the corporate health plan I used to have -- very low deductible, lots of coverage. And it had very high premiums.

So I finally got serious and went out and did something 99% of Americans never do or never have to do: I went out and really researched my health care options. And what I found was that to raise our family's deductible from $500 a year to $2000 a year would save me over $3000 a year in premiums. In fact, if I switched plans, I would get just as high of a maximum payout and I would get a better gaurantee on future pricing and a commitment never to drop my coverage from a large, well-rated insurance company.

There's an old joke about an economist and another fellow walking down the street. There was a $10 bill laying on the ground, but the economist just walked right past it. The other fellow said "what are you doing, you just passed up $10." And the economist replied "It can't be a real $10 bill, because in an efficient market someone would have already picked it up."

That was my reaction to my health care options. I asked my broker, "you mean that if I increase my deductible $1500 I can save $3000 a year? Even in a worst case year I am better off, and in a healthy year I am MUCH better off." He replied "Yep." I asked, "But why doesn't everyone do this?" He just shrugged. As my Harvard investment management professor used to say, as he wrote up a market situation on the chalkboard to begin each class, either this is an opportunity, of there is something we don't understand. As I have gained more experience with my new health plan, I have become convinced it is the former.McQ over at Q&O has a great post on insurance vs. insulation. I won't quote it all, but it is well worth your read. Towards the end, he quotes John Stoessel on my particular conundrum:

But people are so conditioned to expect others to pay their medical
bills that they hate high deductibles: They feel ripped off if they
must pay a thousand dollars before the insurance company starts paying.

But high deductibles may be the key to lowering costs and putting you in charge of your health care.

I am absolutely convinced that the best possible step for US health care is to expose more users to the market and price-value trade offs, while providing high-deductible insurance that shelters people from bankrupting unusual events. More here,here, and here.